Chapter 7 Bankruptcy is the quickest and easiest bankruptcy process, as well as the best option that can be done in around six months or less. In a Chapter 7 bankruptcy, all non-exempt assets are liquidated, and the distributions of the proceeds are paid to your creditors.
Who Can File?
Individuals, partnerships, or corporations who become insolvent and have no hope for recovery from their financial situation can file Chapter 7 Bankruptcy.
What You Need To Know Before Filing for Chapter 7 Bankruptcy
Before filing under Chapter 7, you are required to undergo a credit-counseling course.
To file for this type of bankruptcy, debtors must pay fees associated with the cost of the case, which is $335.00 plus lawyer’s fees, and it will stay on the filer’s credit report for seven years.
The bankruptcy paperwork includes forms listing financial information, assets, income, expenses, and property exemptions. At Debt Rescue Law, we would collect all of your documentation and review them for accuracy.
Read more: DO I QUALIFY FOR A BANKRUPTCY?
How Does It Work?
Most of your unsecured debt will be eliminated. Debtors typically file a Chapter 7 bankruptcy to wipe out all unsecured debt they have accumulated. Unsecured debts include credit card debts, lines of credit, payday loan debt, medical bills, mortgage foreclosure, deficiencies, repossessions, lawsuits, and other unsecured loans. Filing this type of bankruptcy is usually a quicker process than any other form of bankruptcy and takes about six months to complete. Chapter 7 bankruptcy is the preferred process for those with little to no assets or only exempt assets, and low to moderate-income. This type of bankruptcy is called “liquidation.”
Most of the debt mentioned above is discharged; however, various secured debts, such as child support obligations, student loans, certain newer tax debts, and various criminal fines, cannot be discharged in a Chapter 7 bankruptcy. You should still contact us as we may have options other than bankruptcy for student loans and Chapter 7 debt.
Once you have completed filing a petition for bankruptcy, an automatic stay goes into effect. This stay will stop all collection activities, which means creditors must cease pursuing you for your unsecured debt.
To complete the bankruptcy liquidation, the court will assign a trustee to take control of selling off the debtor’s non-exempt property for money and then distribute those funds to pay your creditors. Examples of non-exempt property includes personal or household goods, expensive clothing or jewelry, collector items, valuable artwork, property not considered the primary home, or new model vehicles with equity. Some assets are considered exempt from liquidation, for example, your house and your car.
If a debtor gives false information to hide assets and gets caught, the debtor can face penalties, and their case may be dismissed. In some situations, debtors can face criminal charges for fraud when filing for bankruptcy.
Depending on each case, you may be able to negotiate with the trustee to keep the particular non-exempt property. Our attorneys at Debt Rescue Law will work with you to explore all the options and determine what assets you will be able to keep when you file for bankruptcy. Give us a call at (833) 707-1234 today.